2/24/2010 @ 1:00AM

Winning The Energy Wars

Most Americans expect their country to be a world leader in the use and manufacture of renewable energy like solar and wind. They just don’t agree on how to make that happen. The view from Beijing and Shanghai is different: They don’t believe we can get there at all.

I recently visited China to inspect its solar panel manufacturing plants. From Asia, U.S. plans don’t look quite so grand.

Wages are low in these factories, true enough. But it is a mistake to think of these places as quonset huts with leaky roofs.

These are the most modern and efficient factories in the world, boasting talented management, many trained in North America, who are doing what it takes to take and hold world energy leadership.

Four of the better companies in China are Trina, Suntech, Yingli and
Canadian Solar
.
Suntech Power Holdings Co.
is the largest and controls about 25% of the U.S. solar panel market. Its economies of scale are formidable and growing.
Yingli Green Energy Holding Company Ltd.
is trying to lower costs and raise quality through complete vertical integration; it controls the materials in their solar panels from the sand to finished product. Yingli is the only one of these four that is so thoroughly integrated from beginning to end.

During my visit
Trina Solar Limited
impressed with its commitment to quality control. And Canadian Solar is a thoroughly modern and thoroughly Chinese company, though they are headquartered in Canada, where the Chinese founders met in college. They are counting on their knowledge of North America to give them an edge. Another major player is
JA Solar Holdings
.

Now consider Germany’s solar effort. It’s hardly a sunny hot spot, but it has more solar installations than any country in the world–200 times more than England. That’s because German citizens have been getting as much as 75 cents per kilowatt-hour for the solar power they produce that they sell back to the power grid. Spain has a similar incentive policy.

For their parts Great Britain, France and Ontario recently raised these “feed-in tariffs” to comparable levels. Gainesville, Fla.’s city leaders recently caused quite a stir when they created a 32-cent feed-in tariff.

In California we get less than 10 cents per kilowatt-hour for power we sell back to the grid, more than most places in the U.S., when they are allowed to do it at all.

Few regard these high feed-in tariffs as permanent measures. But neither is there any doubt that the higher the price people receive for creating renewable power such as wind and solar, the more they will create.

The U.S. restricts not just the price but also the amount of solar energy an owner can sell back to the communal power grid. In California commercial and industrial users of solar power are not allowed to build a system that would exceed their previous year’s energy use from conventional systems.

Many of the measures–and half-measures–that we read about every day in American papers are things the Germans and Japanese and Spanish decided to do 10 years ago. And Chinese and French and Italians half as long ago.

I live in a country that pays its enemies hundreds of billions of dollars per year for energy, and that is allowed to happen for generation after generation. So now we are playing catch-up–but still not taking the steps our foreign competitors have long since regarded as routine.

Some say the U.S. needs limits because the grid is too small or prices are too high. Many American projects are funded with upfront credits, not compensation on the back end. And so we wait for whatever infrastructure or new energy source or different financial model will take us to the coveted land of energy independence and reduced carbon.

If we allowed the prices for selling power back to the grid to increase and removed the limits on how much solar energy a farmer or business owner or school or police station could generate, we would see an explosion in demand for solar and other renewables. A higher price for renewable energy would reduce dependence on foreign energy and stimulate domestic manufacturing as well.

The Chinese, with their extensive government support of initiatives like these, are winning. So are the Germans, Japanese, French and Canadians. The U.S. has yet to take the field. Or even decided how–or if–we are going to play.

Tom Rooney is president and CEO of SPG Solar in Novato, Calif., one of the oldest and largest installers of solar energy systems for commercial and industrial users in America. He can be reached at tom.rooney@spgsolar.com.